The current state of the media business was roughly predicted fifteen years ago by a Harvard Business School professor Clayton Christensen. In an article entitled “Disruptive Technologies: Catching the Wave,” Christensen described how small companies, even those with laughably bad products, were able to take over key markets by gaining small footholds then growing faster than the established players could respond.
Using examples from the steam shovel and hard-drive business, Christensen identified two kinds of forces that upend the existing order. “Low-end disruption” describes what happens when the big players get attacked from the fringes and “new market disruption” describes what happens when customers find a cheaper or better product that fills the same need.
Mainstream Media in Crisis
Mainstream media once thrived by controlling the intersection of audience, talent and advertising, but all three areas are now under attack: Audiences are surrounded by new attractive distractions; Google, Craigslist and others are reaping ad revenue dollars; and brand-name talent is abandoning old media for new kinds of digital-only ventures.
Troubled media companies have responded to change much like troubled excavator companies: they cut costs, heap scorn on their new competitors, and fiddle away with half-measures while the newbies grow and thrive.
So what do you do when your investment in printing plants and television studios becomes a liability rather than an asset? When Twitter and teen bloggers are breaking national stories? When anyone can shoot a commercial like this using a $500 camera?
How to Win: Sustaining Innovation, Acquisition, and Counter-Disruption
Christensen says that there are three ways to fight disruptive innovation: sustaining innovation, acquisition, and counter-disruption.
A key to survival is understanding the difference between sustaining and disruptive innovation. Desktop publishing, for example, was a huge technological advance, but was easily adopted by mainstream publishers. “Me-too” blogs and corporate social media accounts are also innovative but don’t disturb the status quo. Christensen says that established players must take full advantage of technological change just to remain in the game.
For mainstream businesses, it may be easiest to simply acquire new players before they become a serious threat. Conde Nast’s acquisition of Reddit, and HBO’s purchase of gaming studio Turbine are hedges of this sort. The purchases don’t necessarily protect Wired Magazine or Game of Thrones, but they position the parent companies for what may come.
The strategy with the greatest long-term benefit is to fight disruption head-on, even when cannibalizes the existing business. Apple stays ahead of its competitors (for now) by continually introducing new product lines even when they undermine existing businesses. The iPhone destroyed a profitable iPod business and the iPad is rapidly undercutting the Mac laptop line. But Apple thrives while the personal computer industry languishes and other smartphone manufacturers stumble.
In any case, mainstream media execs need to stop thinking of digital as a brand extension or a new advertising channel and start thinking of it as the last lifeboat.